Recommendation – Our Thinking OXR commences life as a financially strong mid tear diversified base metals producer with the ability to generate +30% compound earnings growth over the next 3 years and even more appealing 4x increase in free cash flow generation. OXR has articulated its intention to grow aggressively through internal projects and via acquisition. A key driver for the rating the market ascribes to OXR will be the ability to acquire world scale projects without paying an "excessive premium" either actual or implied! OXR has articulated an acquisition strategy of moving from purely base metals to "niche" metals, the bulks and energy metals. OXR has also expressed the view that gold assets tended to be better rated by the market in pure precious metals vehicles. This is an all encompassing strategy and suggests that there are many acquisition targets. A key risk going forward is deployment of cash generated. Management will have to prove to the market that the acquisition strategy generates positive shareholder returns and thus "OZL" is cum acquisition. The Antam transaction, OXR's 1st is value accretive! Strong and growing cash generation = BUY. Poor deployment of cash in an acquisition = Hold (at best). Overall, we believe that the underlying EPS and cps growth is the share price driver and thus we have a BUY recommendation.
OXR Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
